[OPE] The waste in US health care

From: Jurriaan Bendien <adsl675281@telfort.nl>
Date: Tue Oct 27 2009 - 03:26:57 EDT

If the health system is subject to the law of value, it means that the
production, distribution and consumption of health becomes the object of a
commercial trade which is ruled by cost prices and profits, which in turn
are regulated by value relations.

Monopolization and oligopoly can drive up prices, certainly, but (1) this
can occur only within certain limits since

(a) the health system uses commodities which are not produced by the health
system itself,
(b) labour compensation in the health sector is subject to the same laws
operating in society, and
(c) health consumers have a limited ability to pay, they have only so much
insurance and discretionary income

(2) beyond price relationships there are value relationships, and these
value relationships exist independently of prices because they refer to
quantities of labour-time and the valuation of different labour efforts
against each other.

In some Marxisms, which I refer to as bourgeois Marxisms, value is created
by exchange and could not exist except through exchange. National accounts
are also built up on this principle. This completely destroys the whole
edifice of Das Kapital, according to which value is created by social
labour. We already covered this before, so no need to repeat the arguments,
except to say that value relations exist quite independently of prices, and
exist whether prices exist or not, or whether trade occurs or not. Thus we
should always distinguish between the price relativities and the value
relations involved.

There are a lot of confused theories about monopoly and oligopoly in my
opinion, according to which monopoly prices bear no relationship at all
anymore to labour costs. There is no evidence for that as far as I know, bar
exceptional cases where absurd prices can be charged for truly scarce items.
You might buy a packet of butter for 50 cents, a dollar or perhaps even two
dollars but if you have to pay ten dollars for a packet of butter you are
simply not going to buy it, you can't keep buying it with the budget you
have, and you switch to another method of cooking.

In fact oligopoly and monopoly sometimes - and indeed quite often in some
categories of commodities - enables prices to be lowered, with the aim to
capturing greater market shares. Moreover, price hikes beyond a certain
limit attracts competitors who seek to undersell the monopolists.
Monopolizing the supply of a commodity is obviously no good at all if you
cannot sell that commodity and get income from it. And above a certain price
people simply will not buy it. The idea therefore that monopolists can
charge any price they like is therefore in most cases false.

The more important point is that if a product cannot be produced within a
certain band or range of final prices, it will not be produced at all. And
therefore its production is going to be regulated by production prices. It
is either that, or no supply.

I recall once trying to study how a Dutch multinational wanted to organize
fish taken from the Pacific to be sold in Dutch markets. Well, how do they
set the price of fish? It is not so easy, somehow the costs of doing it have
to balance against what you get for it in sales revenue, and it depends in
part of how much you can sell in a given time. In the end you have to make a
profit out of it, so now the whole thing has to be organised in such a way
that cost prices and profits are in proportion.

An interesting actual question is: if we live in the age of monopoly
capitalism, how is it possible that the general price level as measured by
the CPI actually falls at all, in the course of a crisis? If the monopolists
had that much control, you would expect them to screw up price levels to
compensate for loss of earnings. In some cases they can do this, stemming
the fall in prices and loss of income, but if goods and services fail to
sell, this venture will fail.

I do suppose however that in the health system we can encounter a new form
of fictitious capital, namely a capitalization on "human capital", on labour
power, i.e. the ability to extract an economic rent because you personally
own medical skills and status which are in demand or which are even
indispensable to people. This is the stuff of purple politics, i.e. how can
I get more leverage out of my ability status? The idea of education in this
perspective is to raise your human capital value, it is just that with
"certificate inflation" this value can just as easily be devalued again. In
the end the value of education turns out not to be determined by education,
but whether you can apply the skills/knowledge in a particular job. Of
course, if education is your job, then there may be more moves you can make
to "up" your valuation. Analogously, you may be able to capitalize on

If companies can no longer afford to pay health benefits and real wages stay
constant or decline, then the result of that is that the health market will
shrink. In that case, the economic rents obtained from health care will also
dwindle. You might argue that because health is an essential item that
people simply have to buy it. But in fact a lot of cost-cutting can be
achieved in health, in the same way as you can nowadays buy foods in
different grades of quality. You just get high quality health care for the
wealthy, and poor quality health care for the less well off.


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Received on Tue Oct 27 03:28:35 2009

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